http://www.johnmugarian.com/ John Mugarian's Dynamic Growth is a website geared for investors looking to safely grow their money with sector mutual funds and ETFs. en Copyright 2010 Wed, 10 Mar 2010 12:51:35 -0500 http://www.sixapart.com/movabletype/ http://blogs.law.harvard.edu/tech/rss "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Treasury Secretary Tim Geithner The powers behind Treasury Secretary Tim Geithner are trying to drastically repair his wimpy image. I knew I had seen Geither before, but couldn't quite place where I saw him. Then, I finally figured it out. Ever watch "The Jetson's" when you were a kid. Treasury Secretary Tim Geithner reminds me of the cartoon character Gazoo. After spending five years as president of the New York Fed, and watching (or letting) Wall Street partake in very risky behavior, Geithner was promoted to Treasury Secretary. Whenever money is spent to repair an image, it only says one thing. Nothing is going to change, and we like things just as they are. Whose Better: Google or Yahoo Clearly, no stock (since Yahoo's IPO) has been promoted more than Google. In other-words, someone up there (Wall Street) loves them. As far as information goes, I think Yahoo is head over heels better than Google. Yahoo Finance is outstanding, and the menu choices are clear better than Google. But, no one is better touted than Google. Wall Street is Touting Cisco...Again! Yesterday, Cisco announced a next generation router that many are saying will "Forever Change the Internet". That's all well and good, but as the news was released Chairman and CEO, John Chambers was so excited that he decided to sell 1,800,000 shares of Cisco stock. Now I'm not a very complected guy, but if the prospects for this new router are all that its touted to be, don't you think the stock price would soar? If so, why did the CEO of the company take advantage of all the hype and sell 1,800,000 shares? Wouldn't he at least wait until the stock went to $30 ?. Be careful out there! Our Under-loved, and Under Appreciated Portfolio The 12 stocks in our Under-loved, and Under Appreciated Portfolio is up 23% since late November 2009. For more ideas on how to participate in this portfolio, go to http://www.mainstreetinvestor.com. ]]> http://www.johnmugarian.com/2010/03/birds_eye_view_wednesday_march_7.html http://www.johnmugarian.com/2010/03/birds_eye_view_wednesday_march_7.html Wed, 10 Mar 2010 12:51:35 -0500 We are selling, and taking profits in all our investments in the "Top Stock Portfolio (Momentum)" effective immediately. Being a tried and true value investor, I realize that the party in momentum stocks can end abruptly. When it does, the ride down is very painful. Currently, the "Top Stock Portfolio" has an overall gain of 5.6%. The "Underloved and Undervalued Portfolio (Value) has performed much better, and in my opinion is much safer. Going forward, we will focus our attention on the "Value" stocks, and eliminate the "Top Stock (Momentum) Portfolio" as one of our portfolios. Here is how each stock has done individually; CTSH + 11.8% CAG + 11.2% MRVL +7.9% PCLN +3.1% CVX +0.5% F + 3.5% STX +1.3% Yours for Dynamic Growth, John Mugarian www.johnmugarian.com www.mainstreetinvestor.com Disclaimer*** Investing involves substantial risk. Neither the Editor, nor the publisher, or any of their respective affiliates make any guarantee or other promise as to any results that may be obtained from using this e-mail or the Newsletter. While past performance may be analyzed, past performance should not be considered indicative of future performance. No investor should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing the prospectus and other public filings of the issuer. To the maximum extent permitted by law, the Editor, the publisher and their respective affiliates disclaim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommendations prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. The commentary, analysis, opinions, advice and recommendations represent the personal and subjective views of the Editor, and are subject to change at any time without notice. The information provided is obtained from sources which the Editor believes to be reliable. However, the Editor has not independently verified or otherwise investigated all such information. Neither the Editor, the publisher, or any of their respective affiliates guarantees the accuracy or completeness of any such information. http://www.johnmugarian.com/2010/02/dynamic_growth_friday_february_1.html http://www.johnmugarian.com/2010/02/dynamic_growth_friday_february_1.html Fri, 26 Feb 2010 12:33:18 -0500 "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey I have seen some strange things happen over the past few days. - A Bomb Explodes At JPMorgan Chase Office In Greece- Article The question here is why? Are some in Greece blaming their financial crisis on the investment banks? Here in the US, the financial crisis can be blamed on Wall Street bankers that created exotic mortgage investments such as structured investment vehicle (SIV) through their shadow banking system. The terrible thing of course is many innocent people were hurt or killed. -Warren Buffett interviews former Treasury Secretary Hank Paulson at the Omaha Chamber of Commerce meeting in Omaha.- Article Once again, this is odd. Warren Buffett doesn't interview anyone. We must ask why? It has long been rumored that Buffett is friends with members of "The Club" on Wall Street. If you read Buffett's latest book, "Snowball", you can clearly see that he has friends in high places, and gets some insight that the average person doesn't. His latest purchase of Burlington Northern (BNI) clearly doesn't jive with his investment parameters (ROE of 15, and predictable earnings for 10 years, etc) when picking stocks. Instead, he knows a lot more about the push for open borders and globalism than the average investor. Buffett's private preferred stock investments General Electric and Goldman Sachs (something you and I couldn't get) are also sweet deals that are unexplainable. I'm sure GE or Goldman could have offered those deals to the public, and had many takers. clearly, and this has been the case for quite some time, there are basically two investment worlds. Those that have the knowledge ahead of time. And those who get the knowledge after the fact. Talking about knowledge ahead of time, we have still heard nothing about the investors that heavily shorted United Airlines, and American Airlines just prior to the 9-11 attacks on the World Trade Center in NY. To quote 60 Minutes from Sept. 19, "Sources tell CBS News that the afternoon before the attack, alarm bells were sounding over unusual trading in the U.S. stock options market." - UAL put options jumped 90 times (not 90 percent) above normal between Sept. 6 and Sept.10, and 285 times higher than average on the Thursday before the attack. (CBS News, Sept. 26). - American Airlines put options jumped 60 times (not 60 percent) above normal on the day before the attacks. (CBS News, Sept. 26). In investing, more often than you would think, its not what you know, its what you don't know. Dynamic Growth Investments We issued a "Flash E-Mail Alert" yesterday to subscribers. By the way, the service is still free. The changes are as folllows; Top 10 ETF's: New Sells: IYW: iShares DJ US Technology Sector Index Fund- take profits, hold proceeds in cash. DBA: Powershares DB Agriculture Fund- take loss, hold proceeds in cash. Top 10 Fidelity Sector Funds: New Sells: FSPTX: Technology Portfolio- take profits, hold proceeds in cash. Top Stock Portfolio (Momentum): New Sells: BBY: Best Buy- take loss, hold proceeds in cash. OXY: Occidental Petroleum- getting out even, hold proceeds in cash. AAPL: Apple Computer- small gain, hold proceeds in cash. New Buys: F: Ford Motor Company- buy limit $12 STX: Seagate Technology- buy limit $21 Under Loved, and Under Appreciated Stock List (Value): New Sells: ISCA: International Speedway Corp- big insider selling yesterday. RIMM: Research in Motion- take profits That's all for now. I have some new buys on my radar screen, but will wait for the market to pullback before announcing them. A Heads Up I have been in contact with the good people at Main Street Investor (www.mainstreetinvestor.com) to start a newsletter called "Undervalued Stocks with John Mugarian." I am a true blue value investor, and an affiliation with the Main Street Investor would put me back in the public eye like I was at Phillips Publishing.]]> http://www.johnmugarian.com/2010/02/birds_eye_view_thursday_februa_6.html http://www.johnmugarian.com/2010/02/birds_eye_view_thursday_februa_6.html Thu, 18 Feb 2010 11:17:59 -0500 "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Please Note: The weekly newsletter briefing is for members only. To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password. We are adding telephone giant AT&T (T) to the Under-loved, and Under Appreciated Stock portfolio today with a buy limit of $25. I recommended AT&T back in 2004 at the World Money Show in Orlando. In 2004, stock was at $25/ share with a 5% dividend. I recommended selling the stock in February 2007 at $37, for a gain of 48% (not counting the dividend). Today, the stock is hovering around $25 again, but the dividend is now around 6.6%. We are making one additional change. We are moving Conoco-Phillips (COP- buy limit $55) from the Top Stock Portfolio (Momentum), to the Under-loved, and Under Appreciated Stock (Value) since its characteristics are more fit for value investors, rather than momentum investors. ]]> http://www.johnmugarian.com/2010/02/birds_eye_view_friday_february_7.html http://www.johnmugarian.com/2010/02/birds_eye_view_friday_february_7.html Fri, 12 Feb 2010 15:36:34 -0500 "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey I must start off with a "Rest of the Story" piece that you will not see on CNBC, Bloomberg, or the FOX financial channel. This is the story about how Indymac was sold to a Goldman Sachs alumni, as well as John Paulsen, and George Soros. These guys are all part of "the club" (which you are not a member) and are making a killing with your tax dollars- Play Video The Dow Jones rallied more than 150 points Tuesday after reports circulated that European Union was close to an agreement to help Greece with its debt problems. The day before the much watched index closed below 10,000 for the first time in three months. In the pre-market, stocks were indicating a higher open, but gave way to selling pressure as investors feared that the problems in Greece may not be an isolated case. Watching the happenings in Greece, and hearing rumors about Spain, makes me wonder how the seemingly intelligent countries can get suckered in by the financial cancer spewed by Wall Street. Obviously, Wall Street has a long reaching arm, one that is inherently evil, and should be amputated. We remain cautious, and don't buy into the bull market propaganda delivered by Wall Street to the media. In environments such as these, you have to be a more active investor. Buy and hold simply does not work, and it hasn't for a very long time. When buying stocks, you are essentially trading along side the New York investment banks. They will be buying during big declines, and selling into big rallies. A significant percentage of the quarterly profits derived by the investment banks is from trading. This should tell you something. I'm not saying there are not stocks you can hold for the longer term. There are. Our Under Loved, and Under Appreciated Stock List (Value) has a great list of beaten down stocks that stand to do very well in the years ahead. Of course, you must have a 3-5 year time horizon, or more. In the short, and intermediate term, the economy will take much longer to bounce back than what you are being told. The aftershocks of the financial crisis and real estate crash will take many years to subside. You can forget about a smooth, and self-sustaining recovery. It's not going to happen. Unemployment will be a drag for at least another year or two. Home inventories will remain high, credit will be scarce, and housing prices will be slow to recover. I realize this news will make the "Housewives of Orange County",or any other person who tries to imitate "The Lifestyle's of the Rich and Famous" very angry, but that's just the way things are. Unless you are truly rich ($10 million net-worth and above), I suggest you watch your money very closely. You can make money in stocks, but you've got to be more nimble. Here are a few ideas you might want to consider; Trading Range Strategies 1) Buy beaten down stocks with dominate market share, and improving fundamentals. pay attention to the RSI (Relative Strength) numbers when buying and selling. Buy when the RSI on a stock is around 30 or lower. Sell a stock, or sell a call when the RSI is around 70 or higher. 2) Look for stocks that have raised their dividends despite the economic and market debacle. 3) During a big pullback in the market (8-10%++), sell puts on stocks you want to own, at prices you would want to own them. 4) During a big market rally, take profits, or sell calls 10-20% above the market price. ]]> http://www.johnmugarian.com/2010/02/birds_eye_view_wednesday_febru_6.html http://www.johnmugarian.com/2010/02/birds_eye_view_wednesday_febru_6.html Wed, 10 Feb 2010 11:43:13 -0500 "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey Pick a subject, any subject, and you'll see that money, influence, and the Globalist agenda's always take center stage. Health-care for all Having been involved (somewhat) in congressional campaigns, I can tell you that your elected officials do not work for you. Some do, but most of them don't. As was the case during the Clinton years, health-care reform is more about getting votes from common folk, and less about truly helping them. Congress works for people who give them the most money. The health care lobby doesn't want reform because they can't charge huge fees for insurance, medical equipment, drugs, and diagnostic tests. Doctors do not want reform because they want to make tons of money, own 2-3 homes or condos, and drive expensive cars. The law lobby doesn't want reform because they want continue to sue doctors, and make millions from lawsuits. True, and honest, universal heath-care would be a great thing for humanity. Unfortunately, we do not live in a system that cares about truth and honesty. We live in a system that cares about money. Global Thoughts When I was in high school, I was told that the goal of communism was "World Domination". Oh, really? When I look at the policies being promoted by our elected officials, it seems like they are being directed to achieve the same results that was once the goal of communist nations like Russia and China. Here are a few examples; Since the creation of the United Nations, the US military has been slowly transformed into a global military police force. The US military is not the same Red, White, and Blue organization that our fathers and grandfathers once severed. The US military recruits young (mainly poor) Americans on the premise that they are fighting for America, defending our freedoms, and supporting and defending the constitution of the United States from all enemies foreign and domestic. Men and women joining the national guard are being lied to. Thousands of National Guard soldiers are being mislead, and are being deployed to Iraq and Afghanistan which amounts to nothing more than backdoor draft. This being said, American military forces have not been engaged in a constitutionally fought war since WWII. In fact, since WWII, our military has been directed to fight unconstitutional wars in Korea, Vietnam, Kosovo, Iraq, and Afghanistan. Clearly, the US military is now being used as a tool for the United Nations which seeks to force nations around the globe into a New World Order. American forces have been used to both put people in power and take people out of power all over the world. The CIA was responsible for the rise to power of Osama Bin Laden, the Shah of Iran, and even Sadam Hussein. Our new President, "Iraq" Obama, campaigned that he would stop the war in Iraq and bring our troops home. Obama was put in office by the New World Order gang, and as he continues to do exactly what he is told, his poll numbers continue to fall. The media is a tool used by the Globalists, the New World Order gang, and Wall Street. They are, after all, one in the same. Here is a great video from the 1976 movie "Network", with words spoken by Howard Beale. ]]> http://www.johnmugarian.com/2010/02/birds_eye_view_tuesday_februar_5.html http://www.johnmugarian.com/2010/02/birds_eye_view_tuesday_februar_5.html Tue, 09 Feb 2010 12:00:20 -0500 Yesterday, we added telephone giant Verizon Communications (VZ) to the Under Loved, and Under Appreciated Stock List (Value) portfolio, with a buy limit of $29. We added Verizon through the Flash Alert area in the "Newsletter" portion of the website. If you want to get these timely ideas, go to the "Newsletter" link at the top of the page, sign up by establishing your own username and password. Verizon is a classic Under Loved, and Under Appreciated Stock that you hope one day will fall into your lap. Like any stock, you have to wait on the right entry price. Verizon has all the characteristics I look for in a great investment. Also, I've found that companies who dominate their industries, or at least compete aggressively year in and year out, have a higher predictability rate for earnings growth and success. Verizon has a dominate business that is very predictable. The company is a dominant provider for wire-line, wireless, and broadband communications. Formerly known as one of seven Baby Bells, Bell Atlantic changed its name to Verizon after it acquired GTE in June 2000. The company made other strategic moves by acquiring MCI and Alltel, and forming alliances with Vodafone's AirTouch. When you look at the numbers, the company is even more impressive. Verizon has over 91 million wireless customers, and picked up 13 million of those subscribers after the Alltel merger closed in January. The just company added more than 2.2 million new net subscribers in the fourth quarter of 2009 by taking market share from its competitors. Taking about a cash cow, the company generates on average $52 per user, which translates into a quarterly cash generation of $4.732 billion per month. With this cash, Verizon increased its dividend by 3%, bringing the current dividend per share to $1.90 per share, or 6.51%. Despite a terrible recession, the company has managed to grow their dividend. In fact, since the economy began to weaken in 2007, Verizon has managed to raise their dividend from $1.65 in 2007, to $1.90, an increase of 15.1%. Stop and think for a moment. Everywhere you go you see someone using a cell phone. In the past, cell phones were a luxury item. Today, they are part of our everyday lives. The younger generations, teens, and young adults, would rather do without food, than do without a cell phone. The dominance of cell phones is so wide spread that city, state, and federal governments are trying to pass laws to limit their use while consumers drive. What does that tell you? Wireless phones are not only an extremely popular item in the US, but around the globe. Many US household now have cell phones for everyone in the family. Corporations now require cell phones for all their employees. Since time is money, cell phones have allowed corporate America to become more efficient. They will never have to worry about missing an important call, or making a timely call to an important client. In short, the time is now right to buy Verizon ! http://www.johnmugarian.com/2010/02/dynamic_growth_friday_february.html http://www.johnmugarian.com/2010/02/dynamic_growth_friday_february.html Fri, 05 Feb 2010 15:28:16 -0500 Under Loved, and Under Appreciated Stock List (Value) portfolio today. The stock currently sports a 6.51% dividend, and shares a monopoly status with another royal blue chip. For further details, go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password.]]> http://www.johnmugarian.com/2010/02/dynamic_growth_thursday_februa.html http://www.johnmugarian.com/2010/02/dynamic_growth_thursday_februa.html Thu, 04 Feb 2010 09:23:55 -0500 1998-2009 Earnings per Share Earnings: .93, 1.07 1.29 1.41 1.51 1.55 1.61 1.72 1.99, 2.20, 1.78, .95 The average Earnings per Share over the past 12 years = $1.31 My 3-5 year Prediction: GE earnings will once again reach $1.31/ share, or possibly higher. The last time GE had earnings of around $1.31/ share, the stock was trading in a range of $28 to $60. ]]> http://www.johnmugarian.com/2010/01/general_electric_a_common_sens.html http://www.johnmugarian.com/2010/01/general_electric_a_common_sens.html Thu, 28 Jan 2010 15:17:57 -0500 "You know what the news is-- in a minute, you're going to hear the rest of the story"- Paul Harvey The Dynamic Growth "Weekly Briefing" can be accessed through the Newsletter portion of the website. To access the "Weekly Briefing", go to the "Newsletter" link at the top of the page and sign in by establishing your own username and password. In Monday's newsletter briefing, we sold our two oil refiners, Valero Energy (VLO) for a +16.3% gain, and Sunoco (SUN) for a +6.07% gain. Both stocks were in the Under Loved, and Under Appreciated Stock portfolio on the website. Our rationale was simple. Both companies are losing money, and we felt that one or both would be forced to cut their dividends. In light of tighter environmental regulations, both companies are losing money. This is a repeat of what we saw during the Clinton years which lead to tighter gasoline supplies due to lack of refined goods. It's just a matter of time before the consumer is once again choking on extremely high gas prices. Yesterday, Valero posted a $0.28/share loss in the 4th-Q09, and cut the annual dividend from $0.60/share to $0.20/share. The real concern going forward are the eventual effects from Goldman Sachs concocted carbon credit scheme. This scheme forces companies who produce greenhouse gas to buy carbon credits if the produce carbon dioxide. This is a major expense for oil refiners, so instead of losing money they close refineries. This eventually jacks up gasoline prices. Goldman Sachs is not alone in the rush to profit from the bogus carbon credit market. Many of the big investment banks like Barclay's, Citigroup, and Bank of America's Merrill Lynch are rushing in to get a piece of the pie. Despite Mr. (Community Organizer) Obama's speech last night, you can clearly see, as was the case with George W. Bush, Bill Clinton, and George H.W. Bush, they don't work for you and I. These politicians, and many in congress answer to a higher power. And this higher power is not God. Despite all the bank bashing, we believe that the financial sector is poised for a major rebound over the next 3-5 years. We are buyers of Bank of America (BAC) at current levels. We are also buyers of General Electric (GE) since the company's stock price has suffered because of its financial arm. I believe these two "Blue Chip" company's will be great stocks to own over the next decade. On a more speculative note, I also like CitiGroup (C).]]> http://www.johnmugarian.com/2010/01/birds_eye_view_thursday_januar_4.html http://www.johnmugarian.com/2010/01/birds_eye_view_thursday_januar_4.html Thu, 28 Jan 2010 10:01:05 -0500 Becoming a Cash Flow Machine One of the biggest fallacies about Warren Buffett is his slow and steady long-term approach to investing. Let me tell you something, there is nothing slow about Warren Buffett. Steady yes, slow, not a chance. Investors think when Warren Buffett buys a stock that he’s in for the long haul. Well, that’s only partly true. He’s in for the long haul on only a handful of stocks. The others are actively added, reduced or eliminated like middle managers. Most investors are so wrapped up in Warren’s stock picking strategy that they fail to see the real secret to his success. Brokers, and armchair investment gurus have been shouting "“Invest like Buffett”" for years now. They also yell “"Buy, Hold and forget about it".” Well, let me tell you my investing sports fans; you’re only hearing part of the story. The other part…… of the story is...CASH FLOW. That’s right! Tons and tons of cash. If Warren Buffett is a “Buy, hold, forget about it” type guy, then where does he come up with the cash to buy more stock...Cash flow! Very rarely, if ever, do you hear Warren Buffett talk about cash flow. You hear him say, “Our problem is we have too much cash and very few places to put it.” ]]> http://www.johnmugarian.com/2010/01/birds_eye_view_tuesday_january_5.html http://www.johnmugarian.com/2010/01/birds_eye_view_tuesday_january_5.html Tue, 26 Jan 2010 15:08:02 -0500 Is the Fed Propping up the Market? There are some very influential market guru's suggesting that the huge market rally we have witnessed since March 2009 was due to government intervention. The most notable was Charles Biderman of TrimTabs, suggesting that the "Plunge Protection Team" may be involved. The "Plunge Protection Team" is also know as the "Presidents Working Group on Opening Markets". Here is a video of Biderman suggesting this may be the case. Biderman makes a compelling arguement since; - Small Investors have withdrawn $32 billion out of U.S. stock funds over the past year. - Small Investors have withdrawn $18 billion out of U.S. ETFs over the past year. - Corporate stock buybacks are at their lowest levels over the past 10 years. - Insiders Selling. Even CNBC contributor, and professional futures trader Larry Levin (Video) went to record to say "the Visible and Invisible Hand is Everywhere." Week in Review The Dow closed down 216 points on Friday, the third straight triple-digit loss on the week. The Financials were weaker on news that Fed Chairman Ben Bernanke may be facing trouble being reconfirmed. The S&P 500 lost 24 points to 1091. The Nasdaq was down 60 points at 2205. Declining issues beat advancers by 9-2 on the NYSE and by 5-2 on the Nasdaq. The 10-year Treasury note was down 2/32 to yield 3.59%. For the week, the Dow dropped 437 points, or 4.1%. The S&P 500 lost 44 points, or 3.9% and the Nasdaq was down 82 points, or 3.6%." President Obama is trying to save face after the democrats were dealt a stunning defeat in Massachusetts. He attacked the financial institutions on Thursday, saying if they got too big, he would break them up, and proposed prohibiting and/or taxing the proprietary trading. Dow component General Electric (GE) held up well after reporting earnings that beat analyst forecasts. GE was up 0.6% at 16.11. American Express shares fell 8.5% to 38.59 despite announcing that profits beat forecasts. I added a new stock to the Under Loved, and Under Appreciated Stock List this week. We added Yahoo with a Buy Limit of $18. I've had my eye on Yahoo ever since Microsoft offered to buy the company at $33 a share. Personally, I love to use Yahoo Finance over Google Finance, and even Bloomberg. Yahoo fits all the descriptions of an "Under Loved, and Under Appreciated Stock", and has been the redheaded step-child of the internet search engine space. Microsoft saw something it liked, and we do too. Even after last week's sell-off, the Under Loved, and Under Appreciated Stock portfolio is up +13% since late November. My top 2 blue chips in the UL & UA stock portfolio are General Electric (GE), and Bank of America (BAC). Both companies are vital players in our nation, and Valueline says there are tremendous gains to be had over the next 3-5 years. The key is patience. ]]> http://www.johnmugarian.com/2010/01/birds_eye_view_monday_january_1.html http://www.johnmugarian.com/2010/01/birds_eye_view_monday_january_1.html Mon, 25 Jan 2010 11:08:15 -0500 Glass Steagal Act. I have criticized law makers for repealing the Act since it was first abolished in 1999. But, the President failed to lay blame for who was really responsible for the repeal. During today's announcement he should have turned to the Senators behind him, and said, "The collapse of the entire banking system was the fault of the Congress, and President Clinton, for repealing Glass Steagal back in 1999". Here's how it happened. Senator Phil Gramm (Republican of Texas who's now hiding under a rug) and Representative Jim Leach (R-Iowa) introduced the legislation. The final bill passed by a 90–8 margin in the Senate, and 362–57 in the House. President Bill Clinton signed the legislation into law on November 12, 1999. I'm sure the banks lobbied heavily for the legislation, but if these politicians were truly working for people like you and I, it would have never passed. If the semi-reintroduction of Glass Steagal is done properly, banks will no longer be allowed to own and operate brokerage businesses. This means shareholders of stocks like Bank of America (BAC) will reap a windfall if the company eventually spins off Merrill Lynch. As a standalone bank, I believe BAC is worth $45 a share. This of course is assuming sometime over the next 5 years the economy stabilizes, or returns to it's normal growth. Merrill Lynch, prior to the financial meltdown hit as high as $90/ share, and was bought by BAC for under $30. In all honesty, Ken Lewis (former CEO of BAC) really didn't want to buy Merrill, but was forced to do so by former Treasury Secretary Hank Paulsen, and Fed Chairman Ben Bernanke. I don't think Bank of America will have any reservations if they are forced to spin-off Merrill Lynch. But, let's get real here. The chances of President Obama's announcement passing, and severely impacting the banks, is slim and none. A lot of what we heard this morning was political grandstanding in light of the democrats stunning defeat in Massachusetts. Sure, there will be some reforms, kind of like the "Chinese Wall" farce they came up with in 2001 after the investment banks and brokers had conflict of interest problems during the dot-com craze. Anyway you cut it, stocks like Bank of America (BAC), and Wells Fargo (WFC) (both own brokerage operations) should be worth 2 or 3 times what they are currently trading at 5-10 years down the road. ]]> http://www.johnmugarian.com/2010/01/birds_eye_view_thursday_januar_3.html http://www.johnmugarian.com/2010/01/birds_eye_view_thursday_januar_3.html Thu, 21 Jan 2010 13:23:37 -0500 When the Congress and President began talking about stricter regulations on Wall Street and the big investment banks, I could couldn't help but laugh. After-all, who do you think controls these guys? In 1999, when the Glass–Steagall Act was repealed, it wasn't Wall Street and the banks who introduced the legislation. The bill was introduced by Senator Phil Gramm (Republican of Texas) and Representative Jim Leach (R-Iowa). The final bill passed by a 90–8 margin in the Senate, and 362–57 in the House. President Bill Clinton signed the legislation into law on November 12, 1999. Glass–Steagall (The Banking Act of 1933) was a depression era protection that was put into law after the collapse of the American banking system in 1933. Had it not been repealed, I seriously doubt we would have witnessed the collapse we saw in 2009-2009. The repeal of Glass–Steagall allowed large investment banks to underwrite and trade mortgage-backed securities (MBS) and collateralized debt obligations (CDO's) and make up risky products like structured investment vehicles (SIV's). So, now you know why I couldn't help but laugh when our fearless leaders said they were going to impose stricter regulations. The Congress and Senate can pass all the laws they want. We have laws on the books for murder, drugs, and rape, but people still kill, do drugs, and rape. No law can regulate human nature. Since 1987, human nature has morphed into excessive greed, and a quest for power that is beyond a common man's intellectual capacity. We hear about the greed, and we hear about the power, but we sit in front of our TV sets stunned when we hear stories of very evil acts. President Obama talked about a 10 year tax on the banks that got us into the financial crisis. Joe six pack watching the news is yelling "go get'em" while shaking his fist at the TV. What he doesn't realize is every penny of the so called tax will come directly out of his pocket. This was not a tax on the banks. This was a new tax on the consumer. Be Careful Out There! Stocks are getting overvalued. As we look at the Relative Strength (RSI) of a large majority of stocks, we are seeing more stocks overbought, than oversold. The RSI of every stock, and stock index has a range from 0 to 100. As a stock approaches a Relative Strength number of 70 or above, it is considered overbought, while an RSI of 30 or under suggests a stock is oversold. You can gauge the RSI by using this simple to use tool from Bloomberg. I would also be careful of the cheer-leading on the financial channels as the stock market becomes more overbought. This morning I laughed when CNBC's Erin Burnett was reading off the teleprompter. She called Iran's, "Republican Guard", an "elite" military unit, and very dangerous. The last time I heard how tough or dangerous the "Republican Guard" was, was just prior to the US invasion of Iraq. Shortly after the bombing started, the "elite" military unit was waving white flags, and surrendering to crews from FOX news, and CNN. Here is an example of the media getting you to buy stocks at the top. Once again, Erin Burnett was reading off the teleprompter-Video- on January 31, 2007, saying "Goldilocks move aside, we have Economic Nirvana." Jim Cramer on February 25, 2007 was saying the economy would be fantastic. All I can say is...Be Careful Out There! ]]> http://www.johnmugarian.com/2010/01/birds_eye_view_tuesday_january_4.html http://www.johnmugarian.com/2010/01/birds_eye_view_tuesday_january_4.html Tue, 19 Jan 2010 14:31:04 -0500 Okay, NASCAR fans, "start your engines." International Speedway Corp (ISCA) has been on my radar screen since the economic decline began. I haven't pulled the trigger and bought the stock yet, but I do have some sincere interest. Why? I'm not a NASCAR enthusiast, but I am fascinated with their business, and massive following. Rule #1 in starting a successful business is to market and sell to the masses. While NASCAR is a niche business, it does have a massive fan base. Here's what interests me; Living here along the "Red Neck Riviera" (Panhandle of Florida), I see NASCAR fans everywhere I go. If you are not familiar with their existence, they are the drivers you see everyday with numbers such as 8, and 24 on their back windshields. This number displayed on the car or truck is the number of a persons favorite driver. For example, number 24 is Jeff Gordon, 88 is Dale Earnhardt Jr.. Non NASCAR fans may not believe this, but car racing is no longer just a redneck sport. According to a 2004 NASCAR survey, about 75% of the fan base have attended college, over 25% own their own homes, and 36% make more than $50,000 a year. International Speedway Corp (ISCA) founded in 1953 and is by far the biggest, and most successful car racing business in the world. They own, promote, or operate 13 race sites throughout the United States. Here are some you might be familiar with; * Daytona International Speedway® in Florida * Talladega Superspeedway® in Alabama * Michigan International Speedway® located outside Detroit * Richmond International Raceway® in Virginia * Auto Club Speedway of Southern CaliforniaSM, near Los Angeles * Kansas Speedway® in Kansas City, Kansas * Phoenix International Raceway® in Arizona * Chicagoland Speedway® near Chicago, Illinois * Route 66 RacewaySM, near Chicago, Illinois * Homestead-Miami SpeedwaySM, in Florida * Martinsville Speedway® in Virginia * Darlington Raceway® in South Carolina * Watkins Glen International® in New York. International Speedway also promotes more than 100 events during the race season. The company makes a ton of money through radio, television, and merchandise sales. In my opinion, International Speedway fits the description of a highly predictable business with a recurring, and loyal revenue base. A weak economy, and consumer spending concerns have hurt the stock price as ticket sales have slowed. But once the economy begins to show signs of life, sales will rebound. The impressive part of ISCA's business is its growing popularity. NASCAR is the second highest rated sport on television, and corporate sponsorship has found that NASCAR fans are 3 times more likely to purchase a sponsor’s product or service than non fans. Percentage of total revenues are fairly diverse. On first glace one may assume ticket sales are the bulk of the revenue. Here is the actual breakdown; Television and Ancillary- 33% Sponsorship and Hospitality- 26% Food, Beverage and Merchandise- 10% Admissions/ Ticket Sales- 30% Miscellaneous- 1% Earnings Per Share 2004- $2.46 2005- $2.99 2006- $3.24 2007- $2.85 2008- $2.80 During this economic decline, ISCA insiders have been accumulating their stock of International Speedway Corp. (ISCA) steadily through open market purchases and stock grants. If and when the economy improves, I believe ISCA will be off to the races again. A rebound in the economy could see the share price climb back to 2007 levels of $50 per share, a gain of 75%. http://www.johnmugarian.com/2010/01/birds_eye_view_tuesday_january_3.html http://www.johnmugarian.com/2010/01/birds_eye_view_tuesday_january_3.html Tue, 12 Jan 2010 14:54:23 -0500